A durable regulatory framework for stablecoins must balance the potential for enhancing payments with the need to limit negative economic consequences, promote financial stability and guard against consumer protection risks, American Bankers Association President and CEO Rob Nichols said in a letter to House leaders.
The House voted today in favor of the GENIUS Act [S. 1582], which would create a regulatory framework for payment stablecoins. The bill cleared the Senate in June and now heads to President Trump’s desk. Nichols said that while stablecoins offer a new method of transferring value, they also have the potential to disintermediate core commercial bank activity, such as deposit taking and lending.
“History shows us time and again that having fewer deposits in the banking system leads to fewer loans being made and lower economic output being generated,” Nichols said. “It is imperative that the regulatory framework for payment stablecoins not interrupt the flywheel for credit creation by incentivizing value be held in the form of payment stablecoins rather than bank deposits.”
Nichols offers several recommendations to improve the GENIUS Act, including strengthening the prohibition on nonfinancial companies from issuing stablecoin and restoring state regulators’ ability to set requirements for out-of-state, state-chartered financial institutions. He also urged lawmakers to ensure all entities engaged in the payment stablecoin ecosystem comply with Bank Secrecy Act obligations.
Nichols also acknowledged there may be opportunities to amend the legislation through other vehicles, including as part of the CLARITY Act [H.R. 3633] — a separate bill establishing a regulatory framework for digital assets — or during rulemaking for the bill. “ABA looks forward to being an active advocate for our member banks in these venues,” he said.
ABA backs anti-CBDC bill
In a separate letter to lawmakers, ABA also expressed its support for the Anti-CBDC Surveillance State Act [H.R. 1919], which would prohibit the Federal Reserve from issuing a retail central bank digital currency to individuals. It would also prohibit the Fed and the Treasury Department from issuing a CBDC with authorization from Congress. The House passed the bill today. It now heads to the Senate.
“In comments and testimony, ABA has expressed serious concerns about the Federal Reserve Board issuing a retail CBDC,” ABA said. “The ABA believes strongly that a CBDC, defined as a digital form of central bank money that is widely available to the general public, is unnecessary in the United States and would present unacceptable risks and costs to the financial system.”
